Court allows challenge to FTC's $22.5M Google settlement

The FTC will have to defend in court why it's penalizing Google $22.5 million for a privacy violation while still allowing the company to deny any wrongdoing.

A federal judge late Tuesday granted Consumer Watchdog the ability to challenge the legal logic behind the FTC's settlement with Google over charges it misrepresented its tracking of Safari Web browser users.

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Google earned that fine because the FTC alleged its actions violated a 2011 privacy settlement over the company’s rollout of the now-defunct Buzz social network. That order also subjected the company to 20 years of regular privacy check-ups and other penalties.

Neither the FTC nor Google contested Consumer Watchdog's court motion, which could result in a hearing. But the agency has vigorously defended its rationale, stressing that it can enforce settlements even without an admission of guilt.

"We are confident there is no basis for this challenge," a Google representative told POLITICO on Wednesday.

Consumer Watchdog obtained friend-of-the-court status late Tuesday in the U.S. District Court for the Northern District of California. The group believes that it can use the court to move the agency to renegotiate the settlement, while encouraging regulators to rethink the way they handle wrongdoing and liability in future cases.

"The settlement is particularly the start of a very slippery slope," said John Simpson, director of the group's privacy project. "It's very important the FTC get called on this."

In its brief, Consumer Watchdog criticized the current settlement as inadequate, lambasting Google's denial of guilt as a glaring omission that fails to serve the public interest.

The group repeatedly cited the dissent of FTC Commissioner J. Thomas Rosch, who sounded off against the agency's imposition of a fine yet failure to secure some form of admission of wrongdoing from the company.

The remaining four commissioners, however, argued earlier this month that Google's denial is in some ways unimportant to the FTC.

In their joint statement, Chairman Jon Leibowitz and his colleagues say they could still act against Google even in the absence of that admission, and noted the settlement doesn't change the fact the search giant must still abide by the rules or face further penalties.

But the FTC chose not to argue against Consumer Watchdog's court motion. In its Aug. 22 filing, lawyers for the FTC instead asked only for expeditious consideration.

Consumer Watchdog now has until Sept. 21 to submit a full amicus brief, with replies from the FTC and Google due on Sept. 28. Arguing the case on behalf of Consumer Watchdog are Gary Reback and Robert J. Yorio. Reback has represented companies fighting Google on grounds that some of its business conduct is anti-competitive.

This article first appeared on POLITICO Pro at 11:51 a.m. on August 29, 2012.